A:
a. discount rate.
b. tax rate.
c. inflation rate.
d. riskfree rate of return.
Answer: C
Since the real rate of return measures the investor's rate of return in excess of the inflation rate.
RELATED FAQS

The real rate of return is the amount of interest earned over and above the?
The real rate of return is the amount of interest earned over and above the: a. discount rate. b. tax rate. c. inflation ... Read Answer >> 
At yearend 2004, the Federal Reserve reported moderate economic growth of 3% ... ...
The correct answer is c). The real interest rate, also referred to as the inflationadjusted return, factors the eroding ... Read Answer >> 
How is it possible for a rate to be entirely riskfree?
Find out whether there really is such a thing as a riskfree rate of return, and learn why taking the idea of riskfree rates ... Read Answer >> 
What is the difference between real and nominal interest rates?
Learn what nominal interest rates and real interest rates are, how real interest rate takes into account the inflation rate, ... Read Answer >> 
How is the expected market return determined when calculating market risk premium?
Find out how the expected market return rate is determined when calculating market risk premium and how these figures are ... Read Answer >> 
How is the riskfree rate of interest used to calculate other types of interest rates ...
Learn how the riskfree rate is used to compare the yields on bonds, and understand how Tbills are used as a proxy for the ... Read Answer >>
Related Articles

Term
What's a Real Rate of Return?
A real rate of return is an annual percentage investment return thatâ€™s adjusted for inflation, taxes or other factors. 
Investing
RiskFree Rate of Return
The riskfree rate of return is the theoretical rate of return of an investment with zero risk. The riskfree rate represents the interest an investor would expect from an absolutely riskfree ... 
Real Estate
How Interest Rates Affect Property Values
Along with their impact on mortgages, interest rates affect capital flows, the supply and demand for capital, and an investorâ€™s required rate of return. 
Investing
Understanding Market Risk Premium
Market risk premium is equal to the expected return on an investment minus the riskfree rate. The riskfree rate is the minimum rate investors could expect to receive on an investment if it ... 
Investing Basics
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Investing Basics
What Investors Should Know About Interest Rates
Understanding interest rates helps you answer the fundamental question of where to put your money. 
Personal Finance
How Interest Rates Affect Property Values
When interest rates fall, real estate prices tend to increase. Why? Find out here. 
Economics
Understanding Interest Rates: Nominal, Real And Effective
Interest rates can be broken down into several subcategories that incorporate various factors such as inflation. Smart investors know to look beyond the nominal or coupon rate of a bond or loan ... 
Retirement
Retirement Planning: Why Real Rates of Return Matter Most
Here's how to plot your real rate of return, understand your "personal inflation rate" and safeguard your retirement funds against inflation. 
Investing Basics
Inflation's Impact On Stock Returns
When stocks are divided into growth and value categories, the evidence is clear that value stocks perform better in periods of high inflation, and growth stocks perform better during periods ...
RELATED TERMS

RiskFree Return
The theoretical rate of return attributed to an investment with ... 
RiskFree Rate Of Return
The theoretical rate of return of an investment with zero risk. ... 
Timeliness
A proprietary rating system used to rate stocks while taking ... 
Real Interest Rate
An interest rate that has been adjusted to remove the effects ... 
AfterTax Real Rate Of Return
The actual financial benefit of an investment after accounting ... 
Real Rate Of Return
The annual percentage return realized on an investment, which ...